“Zero Covid” Protests? Zero Importance.

Protests in China against “Zero Covid” policies inspire fear of a recession in China and a move against Taiwan and hopes that the Chinese people will overthrow tyranny. These small protests, like the kind we saw earlier this year in Shanghai, are too small for that. China was able to handle vastly larger protests in Hong Kong, which it now controls. The regime can appease the protesters by backing off lockdowns without admitting it has done so. Already steps toward “optimization” have been taken. There is no risk that ending the lockdowns would result in a surge of cases or deaths, because there is no evidence that lockdowns have ever been effective. Economic impact should be as small as it was in the spring with the Shanghai lockdowns. It is not these protests, but the risk of escalating super-power tensions in Ukraine that could create an opening for China to invade Taiwan. Any effects from all this on equity and oil markets should be short-lived.